Our Corrupt System: The Politics of Sugar

Today, as it has for many many years, The New York Times today slams the sweet deal given to the American sugar industry:

[S]ugar supports cost American consumers — who pay double the average world price — more than $1.5 billion a year. The system also bars farmers in some of the poorest countries of the world from selling their sugar here.

The North American Free Trade Agreement is about to topple this cozy arrangement. Next year, Mexican sugar will be allowed to enter the United States free of any quotas or duties, threatening a flood of imports. Rather than taking the opportunity to untangle the sugar program in this year’s farm bill, Congress has decided to bolster the old system.

Big Sugar is not the only beneficiary of this corporate welfare. The farm bill is larded with subsidies and other rewards for agricultural producers. The eagerness of members of Congress to please their sugar daddies is not surprising. Campaign donations from the sugar industry have topped $3 million in each of the last four political cycles. American consumers and taxpayers, as well as poor farmers overseas, shouldn’t have to pay the price.

This is of course all true, but the sugar industry is not the only egregious manipulator of our political system. But I want to concentrate on a different point, of personal interest to me. It is the fact that this system does not protect industries and jobs - it protects fat wallets. The small Florida town I grew up in lost hundreds of jobs - the excuse?

Sugar mill closes; trade pacts blamed

PAHOKEE, Fla. (AP) - The old sugar mill rises like a rusty tin mirage from endless green fields of freshly cut cane and swaths of rich, black soil. A sweet, musty smell hangs heavy in the air as white steam pours from its smokestacks for the last time.

The Bryant Sugar House has ground more than 90 million tons of cane into about 20 billion pounds of raw sugar since it opened in 1962. On Wednesday, the plant wrapped up its 45th harvest season and prepared to close forever following the industry trend -- falling prices and better technology that means fewer jobs as more mills turn to automation and computers.

Faced with growing pressure from foreign sugar, U.S. Sugar Corp., the nation's largest producer of cane sugar, is combining the mill's operations with a high-tech plant 30 miles away. About 200 people will lose their jobs.

'We've had more and more trade agreements that continue to give away more access to our marketplace, creating a very, very competitive environment,' said Robert Coker, the company's vice president.

He said the company was forced to modernize one plant and consolidate operations, 'and unfortunately, when you modernize, it means eliminating jobs.'

Thirty-three mills across the country have closed in the last decade as producers try to remain competitive in a market becoming flush with excess foreign sugar, according to the American Sugar Alliance.

The $10-billion-a-year industry employs 146,000 people in the U.S. But trade agreements with other nations threaten even more American jobs as producers streamline their facilities to cut costs, the industry claims.

How convenient, trade pacts justified firing hundreds of people, a great many of them black and Latino, while the fat wallets still get to pad their pockets by virtue of a government giveaway.

Is it too difficult for Congress to insist that these fat cats use some of the money Congress gives them to keep Americans working?

Our government is broken. And small towns, populated with people who do not have millions for lobbyists, suffer:

Some of the 202 employees will go to work at U.S. Sugar's other plant. Some will retire. Many will simply move on. The company held a job fair.
'It's a sad day,' said 65-year-old mill manager Jacques Albert-Thenet. 'Some of these people have worked here an entire generation.'

Secretary Linda Stanley, 63, is one of only two employees who have worked at the plant since it opened in 1962. She has seen generations working side-by-side: 'Husbands, wives, sisters, children, brothers, nieces and nephews.'

Mill mechanic Jessie Brown Jr., 50, works alongside his two sons. He's been here 31 years and will soon head to the other mill for work.

'I'm going to have to do little adjusting. This is home,' Brown said. 'You gotta start all over again in a new place. Most of the people who are here now are your family.'

Not to worry. The fat cats will still get theirs -on the dole. The 1.5 billion dollar sugar fat cat dole.

From what I've read, US producers are one of the lowest-cost producers in the world, however every sugar-producing nation has such a massive and byzantine web of sugar production corporate welfare (that effectively reduces the selling price of that country's sugar, both for export and local consumption) that it's nearly impossible to untangle.

iow, most any sugar that can be imported for less than US producers sell it for, is because the country of origin has massive sugar corporate welfare programs. And they have their programs because we have ours. And we have ours because they have theirs. And so on.

The solution is simple. STOP SCREWING THE CONSUMER. Unfortunately, dumping this managed trade in favor of free trade is not likely in the cards.

The benefits of managed trade are concentrated in Florida, Hawaii, Louisiana, and the Red River valley area in the north. Secondary beneficiaries are the corn growing states as corn syrup replaces sugar in much US production. Almost all soft drinks in the US are sweetened with corn, whereas in the rest of the world its sugar. The economic costs however are spread.

We all pay more for sugar. The sugar consuming industries have adopted, mostly switching to corn based sweeteners or synthetics. Those like hard candy makers that could not switch largely moved out of the country. So "kdog" are you happy to pay more for sugar to see those blue collar hard candy jobs run out of the country?

The ecological damage is also diffuse. It takes more land (with more agricultural run-off) and more soil erosion to produce a unit of sweetness from corn in Iowa that gets less sun and less warmth than it does to produce that same unit from sugar cane nearer the equator. Killing the Gulf of Mexico at the mouth of the Mississippi is a price worth paying to keep the consumer paying more for sugar. Right "kdog?"

This whole shabby business has nothing to do with capitalism or so called Super-Capitalism. It is all about the politically powerful using the power of the state to direct benefits to their constituents. Well, Big Tent you seem to be an opponent of free trade and a champion of managed trade. So quit whining, you got what you want.

And h-o-o-o-w-w do they get elected? Do they have to get something, raise something, to help them get elected? And,if so, where does most of that something come from, and what do "the politically powerful" have to do to get it?

to understand that the constiuents you're refering are,in large part,the ones most opposed to "mangaged trade"? Or is it your view that any "managment" (i.e., laws, regulations), whatsoever should be done away with in order to free up certain entitiees to operate completely outside any restrictions whatsoever?

Are you telling me that the steel makers and steel workers unions are opposed to restictions on steel imports, or the farm economy in Iowa is opposed to restrictions on ethanol or sugar imports? Thats a hoot.

You cannot corrupt what you do not influence. Note the enviromental damage, job loss, screwed consumers, and bug bucks going to wealthy land owners due to sugar quotas. Now compare to bananas. No corruption, no job loss, no screwed consumers, etc.

Managed trade drove the hard candy industry out of the country. Managed trade put steel consuming industries at a disadvantage to foreign competitors. BTW, there are about 10 jobs in steel using industries for each one in steel production. Calling those kinds of results making the country strong is a joke. But not very funny.

Disbelieving in "managed trade" is just an obfuscationist way of saying market entities should be able to operate outside the rule of law, while (non-corporate) "persons" are all expected to live (hopefully) according to the rules of civilised society.

The rub comes when you are paying for imports, such as oil. If the seller is basing their profits on the dollar, they have to increase their price to maintain the same level. Same with jeans from China, except China just absorbs the change.

Brazil is one of the largest exporters of sugar and recently won a decision (along with Australia and Thailand) in the WTO against EU export subsidies for sugar.

Other than a small subsidy in the Northeast of Brazil which hasn't been paid in years (see this PDF file from the USDA), Brazil has no sugar subsidies. From the same USDA report:

During the 1990's Brazil's sugar export market was opened to private enterprise and sugar price controls were eliminated. By 1999 Government decreed producer prices for sugarcane were eliminated. The result of this liberalization, inefficient operators werewinnowed out and the industry restructured and consolidated.

My father-in-law farms sugarcane in Brazil and has never received um centavo from the government to keep him in business.

Currently, U.S. policy protects sugar producers and processors from competition by limiting imports and excluding lower-cost producers from open access to the market. This keeps domestic sugar prices artificially high. However, 40 countries have been given preferential access to U.S. markets, including certain high-cost producers, such as a number of Caribbean countries.

As EU reforms proceed, and as U.S. corn sweetener and sugar markets become more integrated with Mexico under NAFTA, the U.S. could come under pressure to change its sugar price support program. Potentially, the U.S. could end sugar subsidies and institute a buyout, as it has for peanut quotas and tobacco price supports. Restrictions on imports and domestic production could be relaxed and tariffs lowered. Although these changes would bring sugar prices down, their impact on developing countries would vary.

More open global trade in sugar would benefit some poor African countries that are low-cost producers of sugar, including Malawi and Zimbabwe. Other countries, such as Mauritius and Swaziland, would be hurt economically due to loss of preferential market access.

In order to be competitive in global sugar markets, developing countries would have to produce sugar efficiently and massively, meaning they would have to engage in large-scale, high-tech production, calling into question the opportunities for smallholder farmers. Nevertheless, it may be possible for small-scale sugar producers to organize themselves in cooperatives that could successfully compete.

Hadn't thought that at passover classic coke is really, classic coke. I remember when they came up with that scam as a way to obscure their shift to using cornsyrup instead of sugar. No question that it was much better when they used sugar. The cornsyrup made it revolting.

The workers are considered a social problem, and dealing with social problems is somehow considered socialist.

Trickle down and let them eat cake.

More from emptywheel:

There's an interesting case study going on over at the Senate Commerce Committee. The Committee is trying to write legislation to return the Consumer Product Safety Commission to its former strength so it can prevent things like lead-filled toys from entering the toddler chew chain. Yet the Commission's acting head, Nancy Nord, is trying to preserve the Norquistian "ideal" of small government--she's objecting to Senate plans to give her Commission more money and other resources.

why corprate welfare is never described as "socialism". Is it because along with letting "the market" determine business behavior and ethics, we have to let the market determine what ideas are acceptable?

Because you have to earn it, because there is dignity in work, because society suffers when we aren't productive enough. But business, employers, are never asked to HIRE people for these reasons. You'd be considered crazy to hire more people simply because you could afford ot and in doing so were benefiting the community, while taking a hit in your own wallet. Business is only asked to hire people in order to pay them as little as it can for as much work as it can get out of them. That disconnect between what is good for society, the dignity of work, and what is good for the bottom line is THE core conflict between capitalism and society. Only when those who have share more, and those who have not are allowed to work for a fair share of it, then we'll continue down the new Gilded Age path we're on.

It's the old story of the labor union rep shown robots that, he is told by the company president, will soon replace all those annoying union workers on the assembly line. The union rep looked at the company man and said: "Fine. Now try to sell that robot a car."